UK provokes genuine EU questions

Divergence of France and Germany

by John Nugée

Tue 3 Nov 2015

The British government is slowly beginning to add some details to its hitherto rather general request to its European Union partners for discussions over the terms of its membership. A significant list of issues and proposals has emerged which, while much less than the more strident anti-EU brigade would hope to see, nevertheless has some substance and raises some serious questions for the EU.

George Osborne, the UK chancellor of the exchequer, in Berlin today, is justifiably setting out Britain’s request for a change in the EU’s legal arrangements to protect the UK’s rights under the single market from a possible move towards greater integration by members of the euro bloc from which Britain is (and will remain) absent.

The UK has always been a challenge for the EU. Despite over 40 years of membership, it is the Union’s most reluctant member. It has continually sought opt-outs from the Union’s flagship projects. And it has in turn puzzled, disappointed and exasperated its partners.

On the surface, London’s demands for resetting membership terms, with the threat that the country may vote to leave the Union altogether if it is not listened to, is not only highly unwelcome; additionally, coming when there are so many other issues to solve, it is extremely awkwardly timed.

Indeed this has been the response of a fair number of the other member states. They do not seem to want to discuss Britain’s concerns, or even go to the effort of disagreeing. Instead, they wish simply to dismiss them.

But Britain’s more thoughtful European partners are prepared to ask themselves why the UK feels this way. And some are even ready to admit that some of the UK’s concerns – for example over the relationship between the increasingly coherent and powerful euro area and the non-euro states – are not without foundation.

The Union’s two leading states seem to have diverging views on the matter. Germany has shown itself surprisingly open to seeing whether there is any flexibility in the EU’s arrangements to meet at least some elements of Britain’s wish-list, while France has so far been most unwilling to contemplate unravelling the EU’s current arrangements.

It is hard to avoid the conclusion that this is, at least in part, because Germany is fairly sure it prospers despite the EU’s (many, and known) imperfections, and is therefore confident that it will continue to do so in any amended regime.

France, on the other hand, is more concerned that it prospers, at least partly, because of the EU’s imperfections, many of which are arguably biased in France’s favour (for example, the Common Agricultural Policy), and which any change might put at risk.

At this stage of the UK renegotiations, those who do not want to engage with the British or the issues they raise are still possibly in the majority. But it is quite likely – if the evidence of the Scottish referendum in 2014 is any guide – that as the date for the referendum draws near it will prompt some genuine soul-searching, both in the UK and on the Continent. We will see aired some genuine questions about whether there is a better way to build and run the Union, and indeed what the long-term structure of the Union should be.

Only Pollyanna-like optimists who deny that there is anything at all wrong with Europe should find this unwelcome.

John Nugée, a former Reserves Manager at the Bank of England, is a Member of the OMFIF Board.